Shopify posts surprise profit but slower growth rate hit shares

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(Reuters) - Canadian e-commerce company Shopify Inc (SHOP.TO) (SHOP.N) reported a surprise quarterly profit, but a slower growth rate for the total amount of goods sold sent its shares down 11 percent on Tuesday.

FILE PHOTO: The Shopify logo hangs behind the Canadian flag after the company's IPO at the New York Stock Exchange in New York, U.S., May 21, 2015. REUTERS/Lucas Jackson/File Photo

The company has been spending heavily to improve its website to attract merchants in the highly competitive e-commerce space. A collaboration with Instagram helped it expand its merchant base internationally.

Merchant solution revenue, which largely comes from fees charged to merchants on orders processed through Shopify’s payment system, jumped nearly 75 percent to $114.1 million during the quarter.

However, that growth slowed from last year, when merchant solution revenue jumped 92 percent.

Shopify’s revenue forecast for the year disappointed some analysts. The company now expects 2018 revenue between $1 billion to $1.01 billion, up from a previous view of between $970 million to $990 million.

“Guidance didn’t move much higher despite a solid profitability beat in the first quarter,” analysts at Raymond James said.

Excluding items, the company posted a profit of 4 cents per share, while analysts on average estimated a loss of 5 cents per share, according to Thomson Reuters I/B/E/S.

The company’s net loss widened to $15.9 million, or 16 cents per share, in the first quarter ended March 31, from a loss of $13.6 million, or 15 cents per share, a year earlier.